Bias and Manipulation of Adjudicators

Lanes Group –v- Galliford Try (CILL); [2011] EWCA CIV 1617, Court of Appeal

Facts

1. Galliford Try had the main contract to refurbish the Inverness Train Maintenance Depot and appointed Lanes to carry out roofing and glazing works.  Galliford then sacked Lanes for alleged failure to proceed with due diligence, and followed up with a notice of adjudication seeking a declaration that it had lawfully determined Lanes’ sub-contract.  The ICE was the nominating body.  The ICE was going to appoint Mark Dixon who had acted in a previous adjudication but Lanes objected to him so the ICE nominated Howard Klein.  Galliford objected to him on the basis that its solicitors had had an argument with him on a previous matter acting for a different client.  The ICE went ahead with the nomination.
2. Galliford refused to serve a notice of referral upon Mr Klein and 10 days later wrote to the ICE arguing that the nomination had lapsed and asking for a new nomination.  The ICE nominated its third choice, Mr Atkinson.  He proceeded with the Adjudication even though Lanes tried and failed to get an injunction to stop it from going ahead.
3. Mr Atkinson issued a document entitled “Preliminary Views and Findings of Fact” intended to assist the parties and stressing that he had not made his mind up on any of these points but wanted submissions on matters as they seemed to him.  Lanes objected to this but went on with the adjudication.  In due course, the Adjudicator came out with a Decision which was substantially the same as his preliminary views.  He found against Lanes, who refused to pay on the grounds of his apparent bias as demonstrated by his preliminary views.

Court of Appeal Held:

1. There is nothing objectionable in a Judge or an adjudicator setting out his or her provisional view at an early stage of proceedings so that the parties have an opportunity to correct any errors in the Judge or Adjudicator’s thinking, or to concentrate on matters which appear to be influencing him.  It is wrong to reach a final decision before one is in possession of all the relevant evidence and arguments which the parties wish to put before the Adjudicator.  There is however a clear distinction between (a) reaching a final Decision prematurely, and (b) reaching a provisional view which is disclosed for the assistance of the parties.  Mr Atkinson’s use of the preliminary views document was entirely legitimate.
2. The Court of Appeal described Galliford’s behaviour as “forum shopping”.  Jackson LJ observed that forum shopping was never attractive but the service of an adjudication notice and the appointment of an adjudicator do not start time running nor do they clothe the Adjudicator with jurisdiction (paragraph 40 of his Judgment). The Adjudicator has no powers until there has been a Notice of Referral (Hart Investments –v- Fidler).  In fact, even after there has been a referral, the Claimant has the right to drop one of the heads of claim and reserve it for a later adjudication (Midland Expressway –v- Carillion).  Thus Mr Atkinson’s appointment was valid and his decision was binding on the parties for the time being.

Comment:

1. Adjudication is increasingly a tactical game in which serious advantage could be gained by one party over the other by such methods.  The Court of Appeal’s Decision was given reluctantly but from now on any party that wants to play the system will often be able to manoeuvre until it gets an Adjudicator which it regards as like-minded.
2. In the Sprunt Decision, also mentioned in this newsletter series, an employer was not able to directly pick an Adjudicator by acting as nominating body, but it may be thought that this Court of Appeal Decision gives almost as good an opening to whichever party chooses to be the aggressor in adjudication to choose an Adjudicator who suits.